Power Hour: Dow Climbs to Record High

March 5 (Bloomberg) -- The Dow Jones Industrial Average climbed to a record high as China vowed to maintain its growth target and investors bet central banks will continue stimulus measures.

Qualcomm Inc. jumped 2.5 percent as it increased its dividend by 40 percent and set up a $5 billion share buyback plan. American Apparel Inc. climbed 16 percent after forecasting sales for this year that exceeded analysts’ estimates. J.C. Penney Co. slipped 5.3 percent after its second-biggest shareholder sold part of its stake.

The Dow rose 90.05 points, or 0.6 percent, to 14,217.87 at 9:42 a.m. in New York, surpassing its closing high of 14,164.53 set in October 2007. The Standard & Poor’s 500 Index added 0.7 percent to 1,536.13. The benchmark gauge is trading at about 2 percent below its record high. Trading in S&P 500 companies was 21 percent above the 30-day average at this time of day.

"Confidence and sentiment are improving for investors," Sean Lynch, the Omaha, Nebraska-based global investment strategist for Wells Fargo Private Bank, said by telephone. His firm oversees about $170 billion. "The market has shrugged off some pretty tough news from overseas with the Italian elections and Europe," he said. "We’re seeing the U.S. markets continuing its move up here."

The bull market in U.S. equities enters its fifth year this month. The S&P 500 has surged 125 percent from a 12-year low in 2009 as companies reported better-than-estimated earnings and the Fed embarked on three rounds of bond purchases to stimulate the economy.

U.S. stock indexes rose yesterday amid optimism the Federal Reserve will maintain stimulus measures to support the economic recovery. Fed Vice Chairman Janet Yellen said yesterday the U.S. central bank should press on with $85 billion in monthly bond buying while tracking possible costs and risks from the unprecedented program.

China Growth

Global equities rose today as China pledged to support economic expansion. The nation will keep its growth target at 7.5 percent for this year and plans a 10 percent jump in fiscal spending, the government said during the start of the National People’s Congress today.

The Institute for Supply Management’s index of U.S. non- manufacturing businesses, which accounts for almost 90 percent of the economy, continued to expand last month, a report at 10 a.m. New York time may show. The gauge slipped to 55 in February from 55.2 in January, according to the median estimate of economists in a Bloomberg survey. Readings greater than 50 mean that activity increased.

‘More Optimism’

"There’s more optimism about the U.S. thanks to the Fed," said Jacques Porta, who helps manage $627 million as a fund manager at Ofi Patrimoine in Paris. "The data confirm that the U.S. economy is restarting, but they also show that the recovery is slow. That means more stimulus, which is good for markets, especially for U.S. stocks."

Qualcomm jumped $1.68 to $68.31. The largest seller of semiconductors for mobile phones will increase its quarterly cash dividend to 35 cents from 25 cents, rewarding investors after rising demand for smartphones that run on its technology spurred sales growth. The new share repurchase plan replaces an older $4 billion plan that had $2.5 billion remaining.

American Apparel surged 20 cents to $1.49 as the retailer projected sales of $654 million to $660 million in 2013. That beat the $650.2 million average of two analyst estimates in a Bloomberg survey.

J.C. Penney declined 89 cents to $15.85 after people familiar with the matter said Vornado Realty Trust sold 10 million shares in the department-store company at $16.40 apiece through Deutsche Bank AG.

--Editor: Jeff Sutherland

To contact the reporters on this story: Namitha Jagadeesh in London at njagadeesh@bloomberg.net; Inyoung Hwang in New York at ihwang7@bloomberg.net